DHH Wants More Medicaid Privatization, Stakeholders Hesitant

The state Department of Health and Hospitals is taking preliminary steps to further privatize Medicaid in Louisiana. In August, DHH released a concept paper about reforms to long-term care for the developmentally disabled and low-income elderly.

In a nutshell, the department wants to bring in a private managed care organization – or MCO - to create a network of healthcare providers to serve those populations. Proponents of private MCOs claim they save money, cut down on fraud and improve the quality of care.

The state Dept. of Health and Hospitals is looking to privatize the managed care for Medicaid patients with developmental disabilities and low-income elderly.

Credit Wikimedia Commons

Other stakeholders and advocates for the disabled and elderly throughout the state, for the most part, welcome reform but skepticism remains.

An "About Face"

DHH’s concept paper talks about many goals for more managed care in Louisiana, including compliance with federal Center for Medicaid Services guidelines. The guidelines suggest moving resources from institutions, like group homes and nursing homes, to in-home supports and dramatically shortening the wait list for in-home supports.

Bruce Blaney is the coordinator of the Supported Living Network. His organization represents the largest group of agencies in Louisiana that provide in-home care to Medicaid patients. Blaney said he’s skeptical about DHH’s promise after having seen a 25 percent reduction in Medicaid rates for supported living in recent years and a wait list that’s grown to almost 9,000 for in-home disability services. He said making supported living a priority would be an about-face for DHH.

"Which for the last six years has been cutting services to people who are receiving supported living, denigrating supported living as fraudulent and wasteful and now all of a sudden they’re saying our priority is going to be moving resources to supported living," said Blaney. "I call that a big change."

Blaney said his organization is cautiously optimistic and needs more answers from DHH before they will believe real change is coming.

Hesitant After Bayou Health

Stakeholders like Blaney are hesitant in the wake of the Bayou Health launch over a year ago. That’s the program that outsources the management of acute care for Medicaid patients to five private companies. So far there’s been little evidence Bayou Health is saving money or improving care, but there are anecdotes of patients unable to find specialists, doctors being paid late and complaints from providers about the unpredictability of the program.

Secretary Kathy Kliebert agrees DHH moved too quickly with Bayou Health. She said DHH wants to take a holistic approach to managed care and will take more time to gather input from stakeholders. Kliebert said they are looking to roll as many services as possible - such as acute and primary care, pharmacy, and behavioral health - all into one system for in-home support patients. She said this will give those patients have more options.

"In our current system if you’re in home/community-based care you basically get case management the same across the board no matter what your level of need is," said Kliebert. "In managed care you have the ability to pull that together. If somebody needs intensive case management they get that, if somebody doesn’t need it, they don’t have to have that."

Kliebert said bringing in a private company to manage all these different services for one Medicaid population is the best way to go about streamlining the system.

Results, TBD

But former DHH Secretary David Hood disagrees and thinks privatization only adds another layer to an already complex system. Hood said DHH is also assuming privatization is good for Medicaid in Louisiana but points out more data is needed about Bayou Health or even the recent privatization of the LSU charity hospital system to get a better picture.

"We have yet to see if it will improve quality and access," said Hood. "Could be a good idea, but can you reduce costs at the same time? I would say we don’t know."

A 2012 Robert Wood Johnson Foundation study found that private managed care has had mixed results at improving access to care nationally, and that few states have had success in achieving savings. The states that do see savings tend to be wealthier states, which have more flexibility when it comes to paying administrative costs and paying providers.

Hood said that is not the case in Louisiana.

"We’re a low payer and trying to lower those costs, as low as they already are, risks having providers quit," said Hood.

In 2010, before the launch of Bayou Health, Louisiana ranked 37th in the U.S. for Medicaid spending per enrollee. Hood said more information about Bayou Health is needed to see if Louisiana has improved or not improved in that category since it was launched.

At least one consulting firm says it’s found cost-reduction in privatized managed care. But, as Hood points out, that firm – The Lewin Group – is owned by UnitedHealth Group, one of the largest private Medicaid managed care organizations in the U.S.